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OIL FUTURES: Nymex Crude Falls On OPEC Cut Doubt January 25, 2007

Posted by notapundit in Economic News.

NEW YORK (Dow Jones)–Crude oil futures fell from a two-week high Thursday after a widely watched tanker tracker said OPEC is set to increase output in February, when the cartel is actually due to implement further cuts.

The report added to comments from Occidental Petroleum Corp. (OXY) that its operations in OPEC member Libya won’t be impacted by production cuts. It helped pare recent gains in crude prices that had been made partly on signs the cartel was becoming more committed to reducing output.

“There’s still questions over compliance with OPEC cuts,” said Andy Lebow, senior vice president at Man Financial in New York. “That is what crushed the market, no question.”

The front-month March light, sweet crude contract on the New York Mercantile Exchange settled $1.14, or 2.1%, lower at $54.23 a barrel. Prices had been trading little changed from Wednesday’s two-week closing high before the tracker’s report. Brent crude on the ICE futures exchange fell $1.31 to $54.12 a barrel.

Seaborne exports from the Organization of Petroleum Exporting Countries are expected to rise by 270,000 barrels a day to 24.56 million barrels a day in the four weeks to Feb. 10, compared with the four weeks earlier, U.K.-based tanker tracker Oil Movements said.

Oil Movements head Roy Mason said compliance by the oil- producing cartel to its agreed November production cut is still well below target and that there are no concrete signs OPEC members are implementing extra cuts due to start in February.

Also fueling doubt about OPEC’s commitment to further cuts, Abu Dhabi National Oil Co., or Adnoc, has told one of its term crude buyers in Japan that it will supply full contractual volumes in March, according to a trading official at the Japanese company.

“This was just one company, though, so it may not reflect overall policy (but) traders are still skeptical of OPEC’s ability to cut output at higher prices,” said Peter Beutel, president of trading advisory firm Cameron Hanover in New Canaan, Conn.

Prices rose to a two-week settlement high Wednesday, partly on comments from ConocoPhillips (COP) that OPEC production cuts would reduce output from operations in Libya and Venezuela.

OPEC’s 10 members with quotas agreed in October to cut output by 1.2 million barrels a day from Nov. 1 and later added an extra 500,000 barrels a day of production cuts, due to start Feb. 1.

But the cartel appears to have cut just 600,000 barrels a day of output since October and production actually climbed last month, according to a recent Dow Jones Newswires survey.

February heating oil fell 3.48 cents, or 2.2%, to $1.5491 a gallon. Front-month reformulated gasoline blendstock for oxygen blending, or RBOB, fell 1.75 cents, or 1%, to $1.4441 a gallon.

Following are prices for selected Nymex and ICE contracts and their comparison to values at the prior day’s settlement. Highs and lows include levels hit in overnight trade.

Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents a gallon and the changes are in points; prices for ICE gasoil are in dollars a ton and the change is in cents.

Nymex Prices:
Contract Settle Change Vs Low High
Mar crude oil 54.23 -114 54.10 55.90
Apr crude oil 55.12 -104 55.00 56.70
Feb heating oil 154.91 -348 154.70 160.20
Mar heating oil 155.94 -369 155.80 161.19
Feb RBOB 144.41 -175 143.10 150.05
Mar RBOB 147.41 -200 147.00 153.00

ICE Prices:
Contract Settle Change Vs Low High
Mar ICE Brent 54.12 -131 54.05 55.88
Apr ICE Brent 54.79 -109 54.72 56.40
Feb gasoil 495.75 +575 492.75 500.25
Mar gasoil 499.75 +600 496.50 504.00

By Matt Chambers, Dow Jones Newswires


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